Rents of luxury homes in Hong Kong could drop 10 percent next year, as hedge funds and banks scale back due to the threat of a looming global recession, according to Colliers International and Jones Lang LaSalle (JLL).
“We’re definitely at that tipping point,” said Anne-Marie Sage, Hong Kong-based head of residential leasing at JLL. “We’ve begun to see vacancies at the very top end of the market. The banking and the financial sector have basically stopped all movement.”
Meanwhile, Centaline Property Agency Ltd said that average monthly rents of homes in the city-state fell one percent in October to HK$20.50 (S$3.40) psf.
“We’re seeing more supply of flats for rent in the market,” said Wong Leung-sing, Associate Director of Research at Centaline. “Prices and sales are falling so many people who wanted to offload their units previously have switched to leasing them out.”
Data compiled by Centaline showed that a 2,600 sq ft unit in Brewin Court in Mid-levels was rented out for HK$103,000 in October, while a 2,800 sq ft apartment at the Repulse Bay complex in the Island South district was leased for HK$130,000 a month in October. A similarly sized unit at Fortuna Court in the same area was leased for HK$108,000 a month.
Centaline’s index showed that home prices dropped to a near six-month low after increasing by up to 70 percent since the beginning of 2009.
“Home rents and property prices move in sync,” said Lee Wee Liat, a Hong Kong-based analyst at Samsung Securities Ltd.
“We’re seeing some retrenchment in the financial sector. That’s going to affect people who’re negotiating their rentals.”
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